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China makes cheap electric vehicles. Why can’t American shoppers buy them?
China makes cheap electric vehicles. Why can’t American shoppers buy them?
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BYD electric cars wait to be loaded onto a ship at a port in Yantai, China, on April 18. China has rapidly become a major auto exporter, but tariffs have kept cheap Chinese EVs out of the U.S. market — so far.
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BYD electric cars wait to be loaded onto a ship at a port in Yantai, China, on April 18. China has rapidly become a major auto exporter, but tariffs have kept cheap Chinese EVs out of the U.S. market — so far.
STR/AFP via Getty Images
New EVs aren’t cheap.
At least, not in the United States. In other parts of the world, bargain electric vehicles from China abound, but a 27.5% tariff has kept those cars out of the United States.
Arvind Srinivasan, who recently shopped around for an EV under $25,000, feels conflicted about that.
“As a consumer, yeah, I would buy a Chinese EV, probably without question,” he says. “But as a person who cares about the country, in that view, I feel like, no, we should either tariff or ban them.”
Even higher tariffs and outright bans are both real possibilities.
That’s because cheap Chinese EVs could be devastating to a key sector of the U.S. economy: auto manufacturing. And the Biden administration’s climate strategy, which would benefit from cheaper EVs, also prioritizes U.S. jobs.
Climate, national security, American jobs: This is why Srinivasan is torn. Even if he’s not a fan of big auto companies, exactly.
“At some point, if we don’t support U.S. auto manufacturers, [Chinese automakers] are just going to come in, undercut it,” he says. “Then we’re dependent on China for cheap EVs. And I don’t think that’s sustainable for the country long term.”
Plenty of filet mignon but no hamburger
EV prices have been falling, but cheap ones remain elusive.
That might sound paradoxical, but steak at a discount costs a lot more than hamburger meat. Right now, luxury electric SUVs — the filet mignon of the automotive world — are on sale. But small, cheap cars? That hamburger case is empty.
Well, almost empty. Srinivasan, who wanted an EV to save on gas, found exactly one option. After poring over the new and used offerings, he went with a new Chevy Bolt — just $23,500 after a tax credit.
Arvind Srinivasan, pictured with his Chevy Bolt, wished there were more options when he was shopping for an affordable EV.
Bhargav Devana/Arvind Srinivasan
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Bhargav Devana/Arvind Srinivasan
Arvind Srinivasan, pictured with his Chevy Bolt, wished there were more options when he was shopping for an affordable EV.
Bhargav Devana/Arvind Srinivasan
“It was like, ‘OK, this car isn’t great, but it’s cheap,'” he says. “No one sells anything remotely close to its price target.”
In fact, right now, not even Chevy sells anything close. General Motors is moving on from the older battery that powers the modest-sized, never-profitable hatchback. The Bolt is not currently in production.
Larger vehicles carry larger price tags. As companies pour billions of dollars into making electric vehicles, they’re trying to offset those huge expenses. So even though EV prices have fallen about 10% from last year, they’re still averaging about $54,000, according to Kelley Blue Book.
Companies say they’re working on cheaper options. Ford has a “skunkworks” team tackling the project; GM has pledged to bring back the Bolt with a new battery; Stellantis has said a profitable $25,000 EV is key. Tesla, the undisputed market leader for EVs, says it’s bringing a cheaper model to market by next year.
But they don’t have much time to waste.
Volvo, the Swedish carmaker owned by a Chinese company, plans to sell a Chinese-made EV in the U.S. beginning this summer, at a relatively budget-friendly starting price of under $35,000. (Volvo says it’s paying the tariff; the company did not comment when asked about reports that it will be refunded that money in exchange for exporting U.S.-made vehicles.)
People look at a BYD Seagull at the Bangkok International Motor Show in Nonthaburi, Thailand, on March 27.
Lillian Suwanrumpha/AFP via Getty Images
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Lillian Suwanrumpha/AFP via Getty Images
People look at a BYD Seagull at the Bangkok International Motor Show in Nonthaburi, Thailand, on March 27.
Lillian Suwanrumpha/AFP via Getty Images
How is an “impressive” car just $10,000?
Meanwhile, cheap — really cheap — Chinese EVs are proliferating. The BYD Seagull costs just $10,000 in China.
Chinese-made cars used to be a punchline. Economist Sue Helper, who has spent decades tracking globalization and auto manufacturing, remembers seeing BYD vehicles a few years ago that were, in a word, “terrible.” But she recently took a Seagull for a test drive in a parking lot in Detroit. (They are not allowed on U.S. streets.)
“It’s impressive,” she says. “It’s cute.”
The Seagull would cost more than $10,000 in the U.S., given that it would have to be modified to meet U.S. safety standards. But you could double the price of the Seagull and it would still be a steal.
In fact, you could double the price and pay the 27.5% tariff, and it would still undercut every EV for sale in the United States.
Why? Helper points out that, first, it’s a very small car, a rare beast in the U.S. these days. And China has economies of scale and clever design.
There’s also, she says, “the Chinese playbook of ‘let’s subsidize and repress labor and get ourselves a foothold in an international market and take it over.'”
For instance, she says, the Chinese government heavily subsidizes China’s EV industry to give it an international advantage. Wages in the Chinese auto industry are lower. And some companies in the Chinese auto-supply chain almost certainly use forced labor, or modern-day slavery, according to human rights groups.
Why aren’t cheap Chinese EVs for sale in the U.S.?
National security concerns and old-fashioned protectionism have kept these cars out of the U.S. so far.
When president, Donald Trump imposed a heavy tariff on Chinese-made vehicles, which the Biden administration has extended and could increase.
This year, the U.S. Commerce Department launched an investigation into whether Chinese vehicles’ navigation and communication features could spy on Americans.
The department’s investigation could result in a prohibition on certain Chinese-made vehicles. Sen. Josh Hawley, R-Mo., has proposed hiking tariffs on Chinese vehicles, while Sen. Sherrod Brown, D-Ohio, has proposed an outright ban.
Scott Paul of the Alliance for American Manufacturing is lobbying for higher tariffs and says he’d back an outright ban. His organization represents unionized steelworkers and companies in the auto-supply chain.
“We’ve seen this play out in the past in other industries,” he says. “We need to get ahead of this instead of responding to it after the fact, when we’re just cleaning up the mess and we’re seeing these factories wiped out, these jobs displaced and these communities devastated.”
Meanwhile, a different “Alliance” — the Alliance for Automotive Innovation, which represents automakers — also recognizes the risk but couches it differently.
“The overall competitiveness of the auto industry in the U.S. will be harmed if heavily subsidized Chinese vehicles can be sold at below-market prices to U.S. consumers,” John Bozzella, the president of the Alliance for Automotive Innovation, told NPR in a statement. The group declined to state a position on banning Chinese autos.
There’s good reason for the more measured tone: Major automakers operate globally, not just in the United States. China is a rival, sure, but it’s also the world’s largest auto market, as well as a major supplier. As Bozzella has previously put it, where China is seen by policymakers as “binary” — good or bad, friend or foe — for automakers, “‘China’ is complicated.”
Climate impacts are complicated too
Bonnie Dixon, another frustrated car shopper, is also torn over Chinese EVs.
Bonnie Dixon, pictured with her 1997 Ford Ranger, drives only about once a week. When she does, she would prefer to be driving a zero-emission vehicle. But she can’t find a new one in her budget.
Bonnie Dixon
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Bonnie Dixon
Bonnie Dixon, pictured with her 1997 Ford Ranger, drives only about once a week. When she does, she would prefer to be driving a zero-emission vehicle. But she can’t find a new one in her budget.
Bonnie Dixon
Dixon, who works part time as a research scientist and is on a tight budget, drives an older gas pickup she’d love to swap for a zero-emission car. She’s wary of used cars so is looking at new ones. She needs a car capable of driving long distances — she can’t have a short-range EV that works only around town. New, affordable, long range: no dice.
She doesn’t know much about the politics of tariffs, she says. “What I am aware of is just the great urgency of needing to reduce carbon emissions.”
If she could buy a Chinese EV, wouldn’t that help the planet?
The answer, according to some climate advocates, is complicated.
They argue that buying time for U.S. automakers to change — to make more EVs, at cheaper prices, with cleaner supply chains — could be better for the climate in the long run.
“We are trying to move the market so that all automakers are making vehicles as sustainably as possible,” says Katherine García of the Sierra Club. And when it comes to things like greener steel and electricity, American companies rank much better than Chinese ones. Meanwhile, labor groups and green groups have united around the argument that decarbonizing will be good for the planet and U.S. workers.
García emphasized that people can take public transit, bike and drive used EVs to help fight climate change. But she also sees an urgent need for cheaper new EVs — just maybe not cheap Chinese EVs.
It’s a position that resonates with Dixon.
“Definitely the best solution would be if we could build them in the U.S.,” Dixon says. “That’s what I’m hoping — that the U.S. car manufacturers will get their act together and produce these more affordable EVs that we need.”
In the meantime, when she needs to drive, she hops in her old gas pickup.